Correlation Between Rheinmetall and AWILCO DRILLING
Can any of the company-specific risk be diversified away by investing in both Rheinmetall and AWILCO DRILLING at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Rheinmetall and AWILCO DRILLING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and AWILCO DRILLING PLC, you can compare the effects of market volatilities on Rheinmetall and AWILCO DRILLING and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Rheinmetall with a short position of AWILCO DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and AWILCO DRILLING.
Diversification Opportunities for Rheinmetall and AWILCO DRILLING
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Rheinmetall and AWILCO is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and AWILCO DRILLING PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AWILCO DRILLING PLC and Rheinmetall is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Rheinmetall AG are associated (or correlated) with AWILCO DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AWILCO DRILLING PLC has no effect on the direction of Rheinmetall i.e., Rheinmetall and AWILCO DRILLING go up and down completely randomly.
Pair Corralation between Rheinmetall and AWILCO DRILLING
Assuming the 90 days trading horizon Rheinmetall AG is expected to generate 0.5 times more return on investment than AWILCO DRILLING. However, Rheinmetall AG is 2.0 times less risky than AWILCO DRILLING. It trades about 0.19 of its potential returns per unit of risk. AWILCO DRILLING PLC is currently generating about -0.03 per unit of risk. If you would invest 57,260 in Rheinmetall AG on September 13, 2024 and sell it today you would earn a total of 4,960 from holding Rheinmetall AG or generate 8.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rheinmetall AG vs. AWILCO DRILLING PLC
Performance |
| Timeline |
| Rheinmetall AG |
| AWILCO DRILLING PLC |
Rheinmetall and AWILCO DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and AWILCO DRILLING
The main advantage of trading using opposite Rheinmetall and AWILCO DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall position performs unexpectedly, AWILCO DRILLING can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AWILCO DRILLING will offset losses from the drop in AWILCO DRILLING's long position.| Rheinmetall vs. Apple Inc | Rheinmetall vs. Apple Inc | Rheinmetall vs. Apple Inc | Rheinmetall vs. Apple Inc |
| AWILCO DRILLING vs. Apple Inc | AWILCO DRILLING vs. Apple Inc | AWILCO DRILLING vs. Apple Inc | AWILCO DRILLING vs. Apple Inc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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